Today in Commodities: Go With the Flow

Matthew Bradbard submits: If the dollar is moving south and the indices are moving north, that is conducive for commodities to trend higher. Crude is above the trend line mentioned in yesterday’s blog, higher by over 3% in today’s session. Not to mention a bullish engulfing candle on the daily chart, so yes. folks, it looks like higher ground is in the future. Aggressive traders in futures should use $75.50 followed by $74.40 as support in August. A possible trade idea would be the October $80/85 call spread for $1700. Natural gas has lost ground for the last five days but $4.33 continues to support. Prices are starting to look oversold and we like purchasing 50 cent call spreads expecting a rebound in the coming weeks. Indices domestically and abroad showed strength today, rising 1.50-3% climbing to fresh highs. As of this post the S&P is above the 50 day MA and we’ve yet to get clients short. They are prepped and we expect to make a move this week or next; at the moment we are eyeing 75 point ES September put spreads and scaling short into futures for clients. We feel there is limited upside but an additional 3-4% is not out of the question. 30-year bonds broke the 20 day MA, trading down 0.70% as of this post. We’re anticipating a trade down to the 40 day MA at 124′16 unless the equity rally is derailed.Complete Story »

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Matthew Bradbard submits: The indices trading higher should mean the dollar and Treasuries down and most commodities up. That is how we have positioned clients as you can read below. Oil is thru $76 trading near a one month high. The momentum is up but if you are not already long we would not suggest fresh entries at these levels.

Matthew Bradbard submits: As long as indices tread water or move higher money should flow back into commodities and out of Treasuries and the US dollar. Crude followed thru today and now has the 20 day MA in its sights. As we said yesterday as long as equities move higher we think we could see Crude appreciate $3-5 relatively quickly. As of this post August is higher by $1.70.

Matthew Bradbard submits: In case you were not aware the FOMC is meeting today and tomorrow so stay alert as even inaction can be a market mover. We’ve advised aggressive clients to scale into longs in Crude futures and to gain bullish options exposure; today some clients bought May $95/100 bull call spreads. The 100 day MA held today just above $86 and the trend line comes in just below that level.

Matthew Bradbard submits: No not the ice cream but rather the current market. A bullish inventory report and low and behold a fresh 2010 contract high in Crude. The triple top is negated as we should see $90 on this leg and potentially a re-visit of the spring highs near $93. What has been interesting of late is that the distillates have been outpacing oil on this move higher. When this pattern stops we could be close to a top so monitor their relationships.

Matthew Bradbard submits: After making a new high Crude failed and closed almost $2 off its’ intra-day high. We suggest exiting all remaining longs as we suspect a set back. We anticipate a challenge of at least the 20 day MA; in August that level is $75.15. We’re not suggesting getting short but rather moving to the sidelines. Natural gas finally filled the gap we’d been calling for today; at $5.865 on the August contract.

Matthew Bradbard submits: When CNBC is talking about milk futures you must recognize investors are paying more attention to commodities. Solid showing in Crude and the distillates today as prices made a higher low and higher high. As of this post, August is running into resistance at the 50% Fibonacci retracement at $74.50. On higher trade tomorrow we will have some bullish suggestions for clients. If this serves to be an interim bottom we should see a fairly swift $3-5 move north from here.

Matthew Bradbard submits: On a 3-5% appreciation in the US dollar how much can commodities correct? Inside day in December Crude with prices closing marginally higher. We may get a bounce off the inventory number tomorrow but unless prices settle above $84.50 we think a correction is in the cards. In our estimation in the coming weeks December Crude trades down to $77/78 and then a rally above $90 into year’s end.

Matthew Bradbard submits: The direction the markets move this week will likely determine where prices go the next several months. We suggest booking profits on longs in crude thinking we could get a set back. We would rather be on the sidelines wanting in the market than in the market wishing clients were on the sidelines. Prices are getting over bought and have failed to make it to higher ground in recent sessions.

Matthew Bradbard submits: Now with the World Cup behind us traders can focus on the job at hand and get back to business. We expect Crude oil to track higher but the 20 day MA is serving as resistance and I noticed today looking at the daily chart if you draw a trend line down from the May highs it comes in at $76 in August. Support is seen at $74.40 followed by $73.40. If these support levels hold through tomorrow we should have some bullish suggestions.

Matthew Bradbard submits: The course some major markets chose in the next few sessions could determine where we go the next few months. The path of least resistance now with Crude oil above $82 appears to be up; we would not be surprised to see a challenge of $85 in the days to come. What was the ceiling now serves as the floor; the 9 day MA at $81.42 and 20 day MA at $81.62.